Tag: ODM

  • Lenovo’s Only EU PC Factory: Made for Europe Amid Trade Wars

    Lenovo’s Only EU PC Factory: Made for Europe Amid Trade Wars

    East, always east – this has been the case for many years regarding where PC hardware originates. Since the 2000s, China has been the main hub for most tech product manufacturing due to its large workforce and lower production costs. Despite ongoing trade tensions and tariffs, China continues to be the leading source of technology products worldwide.

    Outsourcing and Original Design Manufacturers

    In addition to China, many companies choose to outsource their production. Major PC brands like Dell, Apple, and HP primarily focus on design, while companies like Pegatron, Foxconn, and Compal handle the actual manufacturing. When you purchase a laptop, desktop, or server, there’s a high chance it was assembled in China by one of these companies.

    Lenovo’s Unique Approach

    However, Lenovo stands out in this landscape. While they do rely on ODMs, Lenovo, as the largest PC maker by volume, operates a number of factories on its own. This article looks at Lenovo’s only European factory located in Budapest.

    Lenovo operates ten factories globally—four in the Americas, five in Asia, and just one in Europe. The Budapest factory, which began construction in 2020 and opened in 2021, is the newest addition to their network.

    Focus on Enterprise Products

    This factory, situated just ten minutes from Budapest Airport, focuses specifically on enterprise products. In Budapest, Lenovo manufactures three categories: ThinkCentre desktop PCs, ThinkStation workstations, and ThinkSystem servers.

    The choice of these products raises the question: Why not include ThinkPad laptops? The answer lies in logistics. Smaller items like laptops are cheaper and more sustainable to produce in Asia and ship globally, even by air. However, servers and desktops are bulkier and heavier, increasing shipping costs, time, and environmental impact.

    Strategic Location in Hungary

    Hungary was chosen for its central location in Europe, making the Budapest facility well-connected to major highways. This is crucial for a factory that regularly receives numerous truck deliveries for parts and shipments of finished products.

    It’s important to mention that Lenovo only assembles products in Europe. The supply chain remains international, with most parts still produced in China and other parts of Asia. The exceptions include packaging materials and the local printing of manuals and keyboards.

    Efficiency in Shipping

    Lenovo claims that assembling in Europe speeds up shipping significantly. Customers in most European countries, excluding the UK, Ireland, and Portugal, can expect delivery within 24 to 72 hours depending on the type of product.

    Beyond assembly, Lenovo also operates a large testing center in Budapest. Here, servers undergo rigorous stress tests before shipment. Workstations and desktops also go through quality checks, which might seem unusual; for instance, running a game is a standard test since it puts considerable strain on the system.

    Commitment to Sustainability

    Lenovo also refurbishes hardware at this site, but this takes place in a separate building to avoid mixing new and used components. The factory utilizes solar energy, and in winter, it leverages the cold air to cool its data center testing area. Although the plant can produce up to 1,000 servers and 4,000 desktops or workstations daily, it still emits some CO2. Nevertheless, local assembly in Europe is generally more sustainable than the alternatives.

    The local factory manager has noted an increase in demand for products labeled “Made in EU for EU.” While there are no definite plans to start laptop production there at the moment, it remains a topic for future consideration.


  • Chinese ODM to manufacture LG Gram

    Chinese ODM to manufacture LG Gram

    LG has made the decision to outsource the production of its LG Gram flagship series of thin and light laptops to an Original Design Manufacturer (ODM). This move means that a different company will now be responsible for manufacturing LG's high-end notebooks, moving away from in-house production.

    LG Gram to be Made by ODM

    According to a new report, Quanta's subsidiary Dafeng will be producing the upcoming Gram models. Dafeng, a Chinese ODM, has previously manufactured other LG Electronics products. Now, they will also be tasked with producing mid-range Ultra PC models and even the Gram 2-in-1 notebooks. An industry insider revealed that the base LG Gram was previously manufactured in-house at LG's Nanjing site before the recent outsourcing.

    Cost Reduction and Improved Efficiency

    The decision to outsource is likely driven by the desire to reduce costs and improve efficiency. LG's Nanjing plant reportedly faced a loss of 2.4 billion won in the third quarter of this year. By outsourcing production, the brand hopes to minimize losses going forward. In their recent financial report, LG's unit that sells laptops and IT products also suffered a significant loss of 20.5 billion won.

    Slowing Demand for IT Products

    LG believes that the decline in demand for IT products is the main reason behind these losses. The LG Gram 2023 series of premium laptops was released in India in June, and earlier this year, the brand launched the LG Gram SuperSlim OLED, which is their thinnest laptop featuring an OLED panel.

    Overall, LG's decision to outsource the production of its LG Gram series of laptops to an ODM reflects a strategic move to reduce costs and improve efficiency amidst a challenging market for IT products.